Avoiding Medicare hiccups: Deadlines, penalties and fraud
October 23, 2012
It's a fact. Deadlines run our lives. Being proactive is not always possible. But the consequences of delay can be costly.
Below are important deadlines and consequences for inaction or the wrong action. Consider this for yourself and those you care about.
"Hiccups" are unplanned, unavoidable, sometimes unexplained delays that upset plans. I had a client a few months ago who took 45 days to get through Social Security for his Medicare. Allocating for these delays can make the difference between goals realized and frustration.
When to set up Medicare Parts A & B
This should be done four months before you turn 65 (if you want coverage to start on your birth month). If you are permanently disabled, you may be automatically enrolled but confirm this. To sign up you can go online to http://www.ssa.gov or call (800) 772-1213. Press "1" for English. Then press "0" for a live person.
Government Medicare penalties
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Part B Delay Penalty: This penalty is 10 percent added to your Part B premium (most people pay $99.90 per month for Part B — the wealthy pay more). Every year you delay after you are eligible, another 10 percent lifetime penalty is added to your monthly premium. After you miss your deadline, you will have to wait until the following July for your Medicare Part B to be effective.
However if you have credible coverage from an employer or a spouse's employer, you usually can delay joining Part B and use the company's coverage as your supplemental and drug plan. Also if you are on Medical, the Medical office can direct you regarding your Part B situation.
Part D (Drug Plan) Delay Penalty: I talk to many who say "I don't need a drug plan, I don't talk drugs." You may not use drugs now, but the odds are you will need drugs someday and you will be glad it is there for you. It is similar to social security. I pay social security but can't use it (I'm too young). The hope is that it will be there for me someday. So seniors get paid because people like me pay into the system since their contribution has already been spent.
Good news for veterans. If you are getting veterans benefits, their drug plan qualifies as credible drug coverage so no Part D penalty will be applied to you.
The calculation of Part D penalty is 1 percent of the average drug plan monthly cost in America (about 30 to 33 cents) per month of delay, added to the monthly premium. This is a permanent penalty, and it accumulates each monthly after you are eligible if you delay joining a plan. Since drug plans started in June of 2006, this is the longest time a penalty can be imposed for people eligible before that month.
Medicare Advantage enrollment deadlines
You can join a Medicare Advantage plan three months before your 65th birthday month, during your birth month, or three months after. It is a seven-month
window for your initial enrollment period.
If you miss that seven-month widow, then you can join during the annual enrollment period that started Oct. 15 and runs until Dec 7. Joining during this period will give you a Jan. 1, 2013, effective date.
Also, if you lose a plan or qualify for a low-income subsidy, you will create a special enrollment period and be able to join a plan at that time.
You have a six-month open enrollment period for supplements, which begins on the first day of the month in which you are 65 or older and enrolled in Medicare Part B. During this period you can join with no pre-existing waiting periods or declines and you can join any plan the company sells.
Signing up early will allow you to have continuous coverage on the month you qualify.
If you miss the open enrollment period, an insurance company is allowed to use medical underwriting to approve or deny coverage and determine the price of your policy.
Supplement Guarantee Issue exceptions
You may have rights to join a plan without underwriting if:
— Your other health coverage is changing in some major way
— You are losing your coverage
— You are moving out of the plans service area
— You are switching to a supplement after joining an Advantage plan during your first-year trial
— If your insurance company goes out of business or has not followed the rules.
Underwriting questions for supplements
If you do need to go through underwriting, here are some of the questions you can be asked to determine eligibility: You should be able to say no to the following questions:
— Have you had kidney failure in the last two years?
— Been an inpatient in the last 90 days?
— Had any suggested inpatient hospitalization that has not been done in the last two years?
— Any suggested surgeries in the last two years that have not been completed for: organ transplant, back or spine surgery, joint replacement, surgery for cancer, heart surgery or vascular surgery?
One of the major expenses to Medicare is fraud. Since advantage plans vary by county, some people have fraudulently tried to change county of residence by using a postal box address or a company address, etc. Also there are parts of Nevada County where the zip code is in Nevada and Placer counties.
If an agent knowingly enrolls a person in a county that is not their primary residence, it is unethical, at the least, and illegal. Once this is realized the person risks their claims being retroactively denied, or even worse, they could face charges for insurance fraud if they were a willing party to the fraudulent act. Integrity is priceless, and scamming the system will only put a person in harm's way unnecessarily.
The deadlines and penalties with Medicare and all its parts can be tricky. If you find yourself in confusion, please feel free to call me. I'm here to help bring clarity to your issues.
Bill Anderson lives in Nevada County and is licensed, certified and authorized to present, provide and bring clarity to Medicare plan choices He can be reached by email at Bill@MedicareDoneRight.com or by calling (530) 432-7988.
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